retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: September 30, 2015

    by Kate McMahon

    Remember, life is short, eat good food with your family.

    That tag line from the folks at Newport Avenue Market in Bend, Oregon, best summed up the goal of the Food Marketing Institute (FMI) National Family Meals Month. We’ve been following the fledgling campaign and welcoming feedback from MNB readers on their efforts to promote family meals -- in store and on social media.

    Two leading examples are family-owned retail operations on opposite sides of the nation: the aforementioned Newport Avenue Market, and Highland Park Markets based in Manchester, CT. Family-owned is an understatement – these are mom-and-pop-and-son-and-daughter operations. Interestingly, both families share a tradition – a weekly Sunday dinner that spans (and feeds) four generations.

    Lauren G.R. Johnson is the chief operating officer, second-generation owner and self-described "Leader of the Pack" of Newport Avenue Market, founded by her parents, Rudy and Debbie Dory. They believe retailers have a responsibility to share the message about nutritious family meals with their customers and employees, and deliver product that makes it easy and economical to get that dinner (or breakfast or lunch) on the table.

    “It doesn’t have to be a picture perfect, 'Leave it to Beaver' meal,” said Lauren, a single parent of a 12-year-old. “It might be food from the service deli or sushi blessed by our sushi chef Morris, a Buddhist monk. But it’s about sitting together as a family.”

    For the Devanney family of the five-store Highland Park Markets, that adds up to about 30 people each Sunday at Tim and Mary Pat Devanney’s home. Five of their six children are in the family business, and they compare the scene to the weekly sit-down dinner in the CBS police drama “Blue Bloods.”

    The Devanneys even created their own Highland Park oven mitts to support the #RaiseYourMitt to commit to one more family meal effort in September, and like the Dory/Johnson family, they practice what they preach.

    Meanwhile in the Midwest, Lunds & Byerly’s stores worked with vendors and each department on a Saturday event featuring easy, nutritious recipes and samples. Amy Goetz, nutritionist in the company's Ridgedale, Minnesota, store, imported a “family” for the day – setting a table at the front of the store populated by her daughter’s bears, with room for children to join while their parents sampled the demonstrations. A simple, but effective, way of engaging customers. (See picture, above.)

    Also in the Midwest, the dietitians at Festival Foods have been actively promoting family meals, and their blog even includes a primer on how to get kids involved in meal preparation, with suggestions for toddlers through teenagers.

    Finally, another chain in America’s heartland took a different social media approach – the Meijer staff teamed up with #CansGetUCooking to host an evening online Twitter party, inviting followers to exchange recipes with the store dietitians and the canned food industry campaign.

    All of the research reaffirms that children who regularly share meals with their family achieve higher grades and self-esteem, healthier eating habits and weight, and less risky behavior. I think the business takeaway here is clear: retailers need to commit to delivering the message and the product to their customers 12 months a year. And not just because of the threat from the fast-casual takeout segment, but rather because it will bring families into the store and back to the table for all of the right reasons.

    Comments? As always, send them to me at kate@morningnewsbeat.com .

    KC's View:

    Published on: September 30, 2015

    by Kevin Coupe

    One-store independent Newport Avenue Market - mentioned above by Kate in her story about family meal marketing - said yesterday that it has implemented an employee stock ownership plan (ESOP) that makes the store an employee-owned company.

    “The ESOP offers employees an opportunity to be rewarded for their hard work and shows our commitment to our loyal customers,” says Lauren Johnson, COO and "Leader of the Pack" of the company. "We will remain locally owned.”

    I think this is worth mentioning because it signifies a recognition - which is incredibly important for an independent retailer that has to fight for consumer dollars against all manner of chain retailers and e-grocery providers - that it is the people on the front lines who make you successful.

    An ESOP isn't for everyone, and there are all sorts of reasons that companies can't take this approach. But the broader message - that companies do better when employees actually have skin in the game - is an important one. And an Eye-Opener.
    KC's View:

    Published on: September 30, 2015

    Tech Crunch reports that Walmart has announced "an expansion of its online grocery shopping service with launches in eight additional markets, as well as plans for a continued rollout to several more regions in the months ahead." The new markets that will begin seeing Walmart's online grocery services in mid-October include Atlanta, Georgia; Charlotte and Fayetteville, N.C.; Salt Lake City and Ogden, Utah; Nashville, Tennessee; Tucson, Arizona; and Colorado Springs, Colorado.

    To this point, it only has been available in five markets, including San Jose, California; Bentonville, Arkansas; Phoenix, Arizona; Denver, Colorado; and Huntsville, Alabama.

    The story notes that Walmart continues to focus on a click-and-collect model, believing "that its competitive advantage in the online grocery shopping space comes from the retailer’s sizable brick-and-mortar footprint here in the U.S. where seventy percent of the population lives within 5 miles of a Walmart store.

    "In addition, by choosing to focus on local pickup instead of delivery, there’s a cost savings for consumers. That’s because some delivery services generate revenue by either marking up the price of items being delivered, or they charge a delivery fee, and they tend to require a yearly subscription fee, as well."
    KC's View:
    Eight new markets today. Eighty new markets tomorrow. And then 800 new markets for click-and-collect in the not-too-distant future.

    It seems clear to me that this is the path Walmart is taking ... testing click-and-collect in a variety of geographies, trying to figure out where and what the sweet spots are. As it looks at the e-commerce landscape, the thing that truly differentiates rom Amazon is its plethora of locations ... and that, if it is going to compete in this space, it has to take advantage of proximity.

    It remains to be seen whether this will work ... but you play the cards you've got.

    Published on: September 30, 2015

    The Associated Press reports that Target has announced that it "will now match its online prices with more than two dozen online competitors including Amazon.com and Walmart.com," a move that "underscores how Target aims to rev up its e-commerce business, which increased by 30 percent in the latest quarter. It also wants to win market share from rivals, a key part of its strategy under its CEO Brian Cornell, who took the helm in August, 2014."

    Part of the shift in strategy includes "allowing 14 days, up from seven, for shoppers to get a price adjustment. And the retailer is increasing the number of online rivals that it will match from five to 29. That includes for the first time stores that require membership, like Costco and Sam's Club." Previously, Target limited its matching policy only to certain online retailers, or to the end-of-year holiday season.

    The story notes that "Target's latest change in policy follows the lead of Wal-Mart, Best Buy and Staples, all of which match their online prices with online rivals. But Target's adjustment puts it ahead of other retailers like Toys R Us, which matches prices for in-store purchases with online rivals but only match their online prices with its own stores."
    KC's View:
    It is unclear to me from going on Target's website the degree to which it plans to make the new price matching policy transparent. I've always felt that one of the things that drives Amazon's pricing image is that it appears to be so transparent ... it compares its own prices to those charged by Marketplace partners on its own site in real time, right on the product page, and notes when other retailers are cheaper. That doesn't include the likes of Walmart or Target or Jet, but the perception is that it is price-competitive and price-aware.

    I think that for Target's policy to be meaningful, there is going to have to be a lot of transparency and a lot of visibility.

    Published on: September 30, 2015

    A retail analytics firm called Boomerang Commerce is out with a new consumer electronics report that "analyzes 1,200 items and examines how Best Buy, Jet, Target and Walmart compete online against Amazon," and concludes that "Walmart has higher consumer electronics prices than the online competitors examined."

    Among the conclusions:

    • "Best Buy, Jet, Target and Walmart lag significantly behind Amazon in their product assortments. Closest competitor Walmart has 32.9 percent product assortment overlap with Amazon, while Best Buy and Jet overlap by 29.5 percent and 16.4 percent, respectively."

    • "Overall Jet most closely matches Amazon on price, averaging only 1.4 percent higher."

    • "Walmart has the highest prices, which average 8.3 percent higher than Amazon among the most popular products."

    • "Amazon competes very aggressively with discounts, offering an average of 66 percent off list prices."
    KC's View:
    I believe these kinds of studies, but only to a point, because one of the things that online retailing offers is the ability to instantly change pricing to meet what the competition is doing. That said, Amazon seems to have the most robust approach to dynamic pricing ... and that is something with which it is very hard to compete.

    Published on: September 30, 2015

    Sales and marketing agency Acosta is out with its annual "The Why? Behind The Buy" report, concluding this time around that "shoppers are increasingly conscious about their food choices, stocking their pantries less and willing to spend slightly more money and time to make healthy meals."

    Among the relevant statistics reported:

    • "Forty-four percent of U.S. shoppers say they eat healthy foods even though they’re more expensive; significantly higher than the 39 percent of shoppers who agreed with that statement in the spring 2014 study ... This figure jumps to 51 percent for shoppers who have children at home."

    • "Shoppers with children spend an average of $385.20 per month on groceries, compared to an average of just $287.80 spent monthly on groceries by shoppers without kids ... Forty-one percent of shoppers with children and 32 percent of total U.S. shoppers expect their monthly grocery budget to increase in the next year."

    • "Shoppers indicated that on a typical shopping trip 22 percent of their grocery items are considered organic products while shoppers with children indicated that an average of 28 percent of their grocery items are considered organic."

    • "Eighty-six percent of U.S. shoppers reported eating dinner at home four or more days in the past week, with 37 percent eating dinner at home all seven days ... Fifty-nine percent of U.S. shoppers say they are cooking more frequently at home, and 68 percent of shoppers with children."

    • "Seventy percent of U.S. shoppers say they stock up on certain items because they were on sale; a 10 percent point decrease from 2012," which reflects the fact that "shoppers are increasingly less likely to stockpile items, even those items they use frequently."
    KC's View:
    All of this is good news for retail food companies ... it means more shopping trips, more purchases, more eating at home. But these same companies cannot just take solace in these numbers ... they have to figure out new, differentiated and innovative ways to make the food shopping experience more relevant to a highly fickle consumer base. Just because the numbers seem to be in your favor doesn't mean that trends can't go the other way. Quickly.

    Published on: September 30, 2015

    The Bergen Record reports that the Hackensack, New Jersey, Costco store will be converted "to a more specialized business center," described as "a store model geared more to small businesses." It will be the eleventh Costco business center to be opened, and the first in the northeastern US; it is not exactly a new concept for Costco, which opened the first one in 1992.

    The story says that "business centers differ from regular Costco warehouses in that they don't sell clothing, apparel, books, seasonal items, or much of the consumer-oriented merchandise typically found at a Costco. They also don't have bakery, pharmacy or optical departments, or food courts. About half of their sales are delivered directly to small-business customers, rather than purchased in the store. They also open and close earlier.

    "The business center stores stock items used by businesses such as hotels, hospitals, caterers, restaurants, convenience stores and professional offices. Those items include cleaning supplies, paper and printing supplies, office furniture, vending machine supplies and kitchen utensils. All Costco members are allowed to shop in business centers."

    The more traditional membership club products that were offered by the Hackensack Costco now will be sold by a new Teterboro, NJ, club that will be opened in mid-October.
    KC's View:

    Published on: September 30, 2015

    • The Chicago Tribune reports that Mariano's is looking to "gauge consumers' appetite for home delivery," researching alternatives that it may use to create a differentiated program.

    The key, CEO Robert Mariano tells the Tribune, "would be for such a service to complement the in-store experience of visiting one of the 33 Mariano's in the Chicago market."

    Mariano's products currently are offered by Instacart, which shops its stores but does not have a formal relationship with the retailer.
    KC's View:

    Published on: September 30, 2015

    Fortune reports that "Whole Foods Market co-CEO Walter Robb said Monday that the food industry is going through a 'tectonic shift,' as the millennial generation drives a push toward greater transparency and sustainability when it comes to what they eat ... 'You better get on board with it or you’re going to get left behind'," he said, referring to the broader national move toward organic foods.

    In a presentation to the Fortune Brainstorm E, an energy and environment conference in Austin, Texas, Robb emphasized that despite the announcement of 1,500 job cuts (the savings from which he said would go toward cutting prices and investing in technology initiatives), Whole Foods will continue to grow at the rate of about 40 stores a year, including the new, lower-priced 365 chain expected to open next year.


    CNBC reports that Kroger CEO Rodney McMullen - who runs the company that arguably is presenting Whole Foods with its greatest competitive threat - said this week that the retailer's fresh business is "on fire." According to the story, McMullen said, "Our fresh departments are on fire. Natural and organics are on fire. We have double-digit growth in those areas. What’s really important is our core supermarket business continues to grow and improve, and that’s really what we’re focused on."

    McMullen also said that he saw no end to this growth: "“I always say, 'Your imagination is your only limitation.' I think it can continue to grow. It’s still growing strong double-digits. I really don’t see that changing. We continue to add products and categories, so we really see a lot of strength there.”


    • The Wall Street Journal reports that Coca-Cola has decided to end its financial sponsorship of the Academy of Nutrition and Dietetics, saying that the decision was part of a broader review of organizations that it has underwritten that are addressing the obesity crisis.

    The soft drink company came in for criticism last month when it was reported that the company was underwriting a group that minimized the role of sugary soft drinks in the growing obesity crisis. Coke said the decision was partly based on budget issues.
    KC's View:

    Published on: September 30, 2015

    • J.K. Symancyk, the president of Meijer, said yesterday that he is leaving the supercenter retailer to become president/CEO of Academy Sports + Outdoors, described as a sports, outdoor and lifestyle retailer.

    Meijer said it will soon announce its plans for Symancyk's role.

    Before going to Meijer in 2006, Symancyk was an executive with Walmart's Sam's Club business.


    • PetSmart announced that Rob Anderson, CFO for Supervalu's Save-A-Lot chain, has been hired as its new senior vice president/chief financial officer.
    KC's View:

    Published on: September 30, 2015

    Got a number of reactions to yesterday's story about how Whole Foods is cutting 1,500 jobs around the country.

    One MNB user wrote:

    Over the past 40 years I've worked inside over 100 of the best supermarket chains throughout the world. It is disappointing see great companies like Whole Foods lose their way.

    We were excited for the opening of a Whole Foods in Highland Village, TX.  Mistakes and bad management caused many of our friends and neighbors to pass on the store.  They built a smaller format store with poor fresh variety, and major space utilized by a seldom used wine bar. The Stores in the area pull from well over 15 miles of high income, dense populated areas.

    Within the first weeks we noticed a lack of fresh items and rotted vegetables on display. When writing about food quality Whole Foods sent the notes to the manager to answer. Several of us received nice notes, but few issues changed. Recently hot food bars that seem to be mostly smoked meats, are empty or not appealing at noon and closed before 5 PM during dinner.

    We are back shopping 15 miles away in Plano Texas, at a full size Whole Foods, but are more often shopping at HEB's Central Market for quality and healthy food. Best of luck to HEB, Sprouts, independence and Wild Oats.


    Yikes.

    From another reader:

    As Whole Foods has expanded their employee competence has declined drastically,  especially in the peripheral service departments of the stores.

    I used to get engagement from staff at Whole Foods but now I see groups of  post-teenagers standing around speaking to each other, not engaging customers,  and ignorant in their specialty areas, when I pose a question. My store is not a friendly, engaging place anymore.

    It's my contention that if they were to commit to their employees and train them properly, they would flourish.

    Attempting to compete on price is fatal and wrong headed. My local independent, Nugget Market,  is so much nicer to go to: employees are very upbeat and engaging and the store offers nearly every natural and organic food I am looking for.  Employees seek out an answer if they don't know at the Nugget and the employees seek to encounter customers.

    Seems like my Whole Foods has become apathetic. Where is the community "feel" anymore?


    Yikes.

    And from another reader, who happens to be a Whole Foods employee:

    The worst part is that the open letter, the letter to us, and the way everything is worded to the press is very disingenuous and intentionally vague and misleading in parts.

    1500 jobs is the NET loss, IF people reapply for positions or find another spot in the company. The true number of layoffs is much higher. There also are not 2000 open positions, there are technically 1700, but the company is in a hiring freeze as well as not allowing any transfers from store-to-store, as well as about to go into a pay freeze next fiscal period, so any raises that would be owed at that time will not be paid out.

    The "in the coming two months" bit is also intentionally misleading. All of the layoffs happened Friday, Monday and today, but those people who are not choosing to try and reapply (where they will have to compete against their former coworkers for the open spots, like a game of musical chairs) will be given 8 weeks of pay, which is where they get the 2 months number from.

    The natural attrition part was explained to me yesterday by my STL, where he said that typically the company loses about 400 employees every 2 fiscal periods through quitting/separations/etc. but if those numbers aren't reached (which who knows in this type of employment market), I imagine we'll see another round of layoffs.

    One of the larger stockholders in WFM is a company called Vanguard, who are known for these type of corporate raider politics/practices. They did it to their own company, then Toys'R'Us, then Home Depot, and now are doing it to Whole Foods. Their goal in every holding has been to restructure the employment percentages to a 90/10 split of part-time to full-time. If you think about a typical experience in Home Depot (can never find anyone to help, when you do they know NOTHING about hardware or home improvement), it's scary to see where Whole Foods may be headed.


    Yikes.

    One of the things that always has differentiated Whole Foods has been that it, in fact, has been different. There's no question that it is facing competitive pressures, but if it responds to those pressures in the same way that companies like Toys R Us do, then it is going to lose that luster very quickly ... and it will be extremely difficult to gain it back.

    By the way ... it is hard to imagine anything worse for a retailer than being described as having a Toys R Us-style strategy.
    KC's View: